F.A.Q.
A will is a legal document that provides instructions for how you want your assets to pass after your death and names who will serve as your personal representative to administer your estate. If you have children, your will also names guardians for your children if they are under the age of 18, includes a trust for the benefit of your minor children, and names a trustee to manage those assets. You can change or revoke your will at any time before your death.
A person who dies without a will or revocable trust is deemed to have died intestate and Colorado’s intestacy laws determine how assets are distributed. For many, this may result in unintended consequences. Exactly who will receive your assets depends on whether you have a spouse, children, grandchildren, parents, or siblings living at the time of your death. For example, if you are single with no children, your assets will be distributed to your parents if they are living.
Similar names frequently result in confusion. A living will is entirely separate from a will. It is an advance health care directive that becomes operational if two physicians certify in writing that you have a terminal condition or are in a persistent vegetative state and you are unable to make or communicate decisions concerning yourself. A living will allows you to direct whether life sustaining procedures and artificial nutrition and hydration will continue.
There are many different types of trusts. A revocable or “living” trust is one common type of trust. A revocable trust provides instructions for how assets are managed during your lifetime and after your death. The person who creates the trust is the “settlor.” The person in charge of managing your trust is the “trustee.” Typically, the person who creates the revocable trust manages the person's own assets during their lifetime. If the initial trustee is unable to manage assets during their lifetime due to incapacity or death, the person named as successor trustee can step in to manage the trust assets.
There are three primary benefits of a revocable trust. First, it may allow you to avoid probate. Second, you can name a successor trustee who can easily step in to manage your trust assets in the event of your incapacity. Third, you can maintain greater privacy at your death. If all your assets are titled in your revocable trust at your death (referred to as a “fully funded” trust), leaving no more than $80,000 (in 2023) of assets in your individual name, you can avoid probate. If you own property outside of Colorado and you title that property in your revocable trust, you can also avoid going through probate in multiple states. A revocable trust, unlike a will, is not filed with the court at your death. Beneficiaries of a trust are only permitted to see the portions of the trust applicable to them.
No. A revocable trust does not avoid federal estate taxes or creditors.
If you move to Colorado or move from Colorado to another state, it is prudent to have your estate plan reviewed. A will that is valid in one state is just as valid in another state. There are, however, other factors that could affect your will. These factors include community property issues, differing rules about the disposition of personal property, local rules regarding spousal and dependents’ rights, and state specific laws regarding your powers of attorney.
A marital agreement must be in writing and voluntarily signed by both parties to the agreement. There must be a full financial disclosure of the income, assets, and debts of each party before the agreement is signed. Each party must also have access to independent legal representation before the agreement is signed. If both parties are not represented by an attorney, the agreement must include language regarding a notice of waiver of certain rights.
Probate, also known as estate administration, is the court process by which assets of the person who has died are distributed. A Colorado court will appoint a personal representative (also known as an executor) to collect assets, pay debts and taxes, and distribute assets according to the will (or according to the laws of intestacy if you died without a will). The soonest probate can be completed is six months from the date a personal representative is appointed, but it is not uncommon for the process to take longer.
Under Colorado law, a personal representative is a fiduciary. A personal representative (also known as an executor) is a person appointed to administer a decedent's estate and has many duties, rights, and responsibilities. The first steps are finding the will and determining if probate is necessary. The personal representative also needs to notify beneficiaries named in the will or people entitled to inherit under the intestacy laws of the deceased person’s passing, collect and manage assets, pay debts and taxes, and distribute what is left to the people who inherit it.
Under Colorado law, a trustee is a fiduciary and held to a very high standard of care. Trustees are legally responsible for managing, preserving, and administering assets for the benefit of the named beneficiaries. Trustees are granted broad powers over assets held in trust. A trustee’s powers come from trust documents, as well as state and federal trust law. A trustee is accountable to the beneficiaries and is expected to act prudently and in the best interest of the beneficiaries at all times.
Everyone has a “marital agreement” of sorts. It’s either the one provided for you in accordance with the laws of the state of Colorado or one specific to you and your partner. The reason to enter into a marital agreement is to alter the rights provided by Colorado law of one or both spouses to the property of the other in the event of divorce, death, or both. You may consider a marital agreement if you seek certainty with respect to the disposition of property in the event of divorce or death, to protect family or individual wealth, to protect business interests, to protect children from a prior marriage, or protect your interest in a family trust or other inheritance.
